At the Henley Vaporium, one of a growing number of
e-cigarette lounges sprouting up in New York and other US cities, patrons can
indulge in their choice of more than 90 flavours of nicotine-infused vapour,
ranging from bacon to bubble gum.

The lounge, located in Manhattan's trendy Lower East Side,
features plush seating, blaring rock music and fresh juice and coffee.

A sprawling sign on
one wall lists all the carcinogens that e-cigarette users avoid by kicking
their smoking habits and using the e-devices instead. But the growing
popularity of e-cigarettes has not escaped the notice of the industry's
critics, who have stepped up calls for new regulations, including bans on their
use in public places, even though the scientific evidence about exposure to
their vapours remains inconclusive.

E-cigarettes are
slim, reusable, metal tubes containing nicotine-laced liquids that come in
exotic flavours. When users puff on the device, the nicotine is heated and
releases a vapour that, unlike cigarette smoke, contains no tar, which causes
cancer and other diseases.

Worldwide trend

The product, introduced in China in 2006, has become a
worldwide trend at least in part because it may help smokers of regular
cigarettes break the habit. "It's an addiction – not everyone can quit cold
turkey," said Nick Edwards, 34, a Henley employee who says he kicked a
15-year cigarette habit the day he tried his first e-cigarette.

"E-cigarettes give you a harm-reduction
option." That's one reason why the market for e-cigarettes is expected to
surge, reaching R2 billion by the end of 2013 and R10 billion by 2017,
according to Bonnie Herzog, an analyst at Wells Fargo Bank in New York.

Herzog said the US market alone could top R1 billion this
year. She predicts that by 2017 e-cigarettes sales will overtake sales of
regular cigarettes. That estimate does not take into account the impact of
potential government regulations on sales.

E-cigarettes may help smokers save money too. Edwards, for
one, says he cut his monthly cigarette bill in half when he switched.

Despite the perceived benefits, critics worry that the
addictive nicotine found in e-cigarettes could lure more people into smoking
and discourage others from quitting altogether. "Essentially e-cigarette
companies are selling nicotine addiction," said Dr Neil Schluger, chief
scientific officer for the World Lung Foundation, which advocates for tobacco
control.

"Once you have them addicted to nicotine, you can sell
them all sorts of things, including conventional cigarettes," he said.
"This is a giant Trojan horse." In the United States, such concerns
have led to calls for increased government regulation.

Rules and regulations

The US Food and Drug Administration currently has no
regulations on e-cigarettes, but it is expected to release rules this month
that would extend its "tobacco product" authority over the devices.
New FDA rules could follow.

"Further research is needed to assess the potential
public health benefits and risks of electronic cigarettes and other novel
tobacco products," said Jenny Haliski, an FDA spokeswoman.

To be sure, no one is expecting the federal government to go
as far as Brazil, Norway and Singapore, where the devices are banned outright.

In the United States, Utah, North Dakota, Arkansas and New
Jersey have already passed legislation outlawing e-cigarettes wherever smoking
is prohibited.

Other jurisdictions are considering new rules of their own.
New York City could decide as early as next week whether to prohibit e-cigarette
use in public places.

Under Mayor Michael Bloomberg, who leaves office January 1,
New York was one of the first cities to ban cigarette smoking in public places,
and its decision could influence Chicago and other cities that are considering
similar controls.

Revenue spinners

The outcome is crucial for tobacco companies, which are
banking on the devices to make up for a sharp decline in sales of regular
cigarettes in the United States. Smoking among US adults dropped to 18% in 2012
from 24.7% in 1997, according to the Centres for Disease Control and Prevention
(CDC).

Reynolds American Inc, which makes Camel cigarettes, began
selling its Vuse vapour cigarettes in Colorado retail stores in July and plans
on expanding nationwide by mid-2014. Other companies have also dipped into the
e-cigarette business.

Last year Lorillard
Inc, maker of Newport cigarettes, acquired the best-selling blu eCigs brand,
while Altria Group Inc, best known for the Marlboro brand, followed suit in
August with the launch of MarkTen e-cigarettes. "As society is
transforming, so must the tobacco industry," said Reynolds spokesman
Richard Smith.

"It's just good
business sense." The arrival of Big Tobacco could mean fierce competition
for small e-cigarette companies that do not have the resources or experience to
deal with tight government regulation. But many e-cigarette companies say Big
Tobacco is late to the game and has a lot to catch up on. "They are going
to need to boost up their game if they want to compete," said Christina
Lopez, a saleswoman at Smokeless Image, an e-cigarette shop that sells smaller
brands in Hoboken, New Jersey.

Health risks
uncertain

To be sure, there is still a dearth of scientific evidence
about the safety of e-cigarettes and their effectiveness in helping smokers
quit. For regulators, the big question is, are e-cigarettes a treatment for
would-be quitters or "gateway" products to nicotine addiction?
Supporters say some e-cigarettes allow users to slowly reduce their nicotine
intake and wean themselves off nicotine completely.

A study published in
the September issue of The Lancet, the British medical journal, said the
e-cigarettes are as effective as nicotine patches for smokers trying to quit.
Worldwide, conventional cigarette addictions kill 6 million people a year, in
part because of the 250 harmful chemicals found in tobacco smoke, which can
cause cancer, heart disease and stroke, says the CDC. But e-cigarettes may not
be harmless, either. Nicotine addictions, fed by smoking, chewing tobacco or e-cigarettes,
can cause high blood pressure, disrupt heart rhythms and lead to obesity and
diabetes.

Electronic devices that feature fruit and candy flavours are
even more worrying, critics say, because they could introduce children to
smoking.

E-cigarette vendors say the sweet flavours make the process
of quitting smoking less painful. "By taking a sort of 'Willy Wonka', fun
approach to a serious matter, it breaks down people's perceptions of
e-cigarettes," said Talia Eisenberg, owner of the Henley Vaporium, referring
to the fictional candy maker.

The CDC said 10% of high school students surveyed reported
using e-cigarettes in 2012, up from 4.7% in 2011.About 60% of current users are
over 35 years old, and 43% are college-educated, according to Reynolds
American.

Twelve states, including New York, have passed laws
preventing e-cigarette sales to minors.

At a hearing on the proposed New York City ban on
e-cigarette use in public places, Health Commissioner Thomas Farley said
allowing it could glamorise all types of smoking and encourage teenagers and
children to take up the cigarette habit. "While more research is needed on
electronic cigarettes, waiting to act could jeopardise the progress we have
made over the last few years," he said.

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